Gold Heads for Worst Quarterly Run Since 2001 on U.S. Economy

March 27 (Bloomberg) -- Gold declined for a fourth day,
extending the first back-to-back quarterly losses since 2001, as
signs that the U.S. economy is recovering cut demand for the
metal as a store of wealth. Silver tumbled.

Gold for immediate delivery fell as much as 0.5 percent to
$1,592.74 an ounce and was at $1,594.86 at 3:24 p.m. in
Singapore. Prices have lost 4.8 percent this quarter as holdings
in exchange-traded products contracted 6.8 percent, the most on
record. Bullion for June delivery lost 0.2 percent to $1,594.60
an ounce on the Comex in New York.

Orders for U.S. durable goods climbed more than forecast in
February and home prices increased the most since June 2006,
reports showed yesterday, signaling that the recovery in the
world’s biggest economy is gaining traction. Federal Reserve
Chairman Ben S. Bernanke said on March 20 that the U.S. central
bank may adjust its monthly bond buying based on several
measures, including payrolls, wages and jobless claims.

“As we see the U.S. recovery gaining momentum, that’s
making funds flow back to the dollar and pushing it up,” said
David Lennox, an analyst at Fat Prophets in Sydney. “That’s
putting pricing pressure on gold.”

The Dollar Index, a gauge against six major trading
partners, rose for a third day and is poised for a quarterly
advance. Gold holdings in ETPs stood at 2,453.47 metric tons
yesterday, according to data compiled by Bloomberg.

Dallas Fed President Richard Fisher said yesterday that
he’d like the U.S. to reduce its mortgage-backed security
purchases program amid signs that the economy will probably grow
at about 3 percent by the end of the year. At present, the Fed
buys $85 billion of securities a month to spur the recovery.

Silver for immediate delivery slumped as much as 1.8
percent to $28.245 an ounce, the lowest since March 1, and was
at $28.315. Prices are set to drop for a second quarter. Spot
platinum traded little changed at $1,573.25 an ounce, while
palladium lost 0.5 percent to $759.50 an ounce.